Arbeitspapier
On-the-job search and the cyclical dynamics of the labor market
We develop a dynamic general equilibrium model where workers can engage in search while on the job. We show that on-the-job search is a key component in explaining labor market dynamics in models of equilibrium unemployment. The model predicts fluctuations of unemployment, vacancies, and labor productivity whose relative magnitudes replicate the data. A standard search and matching model suggests much lower volatitilities of these variables. Intuitively, in a boom, rising search activity on the job avoids excessive tightening of the labor market for expanding firms. This keeps wage pressures low, thus further increasing firms?incentives to post new jobs. Labor market tightness as measured by the vacancy-unemployment ratio is as volatile as in the data. The interaction between on-the-job search and job creation also generates a strong internal propagation mechanism.
- Language
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Englisch
- Bibliographic citation
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Series: Working Paper ; No. 513
Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
Business Fluctuations; Cycles
Unemployment: Models, Duration, Incidence, and Job Search
job-to-job mobility
worker flows Beveridge curve
business cycle
propagation
Arbeitsuche
Arbeitsmobilität
Dynamisches Gleichgewicht
Beveridge-Kurve
Konjunktur
Arbeitslosigkeit
Friktionelle Arbeitslosigkeit
Schätzung
USA
Matching
Lubik, Thomas A.
- Handle
- Last update
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20.09.2024, 8:22 AM CEST
Data provider
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Object type
- Arbeitspapier
Associated
- Krause, Michael U.
- Lubik, Thomas A.
- The Johns Hopkins University, Department of Economics
Time of origin
- 2004